Much of the economic displacement observed in current times stems from the effects of the information and technology revolution and its magnification by trade. National populists have gained immensely by promising the affected individuals a “community” recreated for them, said former Reserve Bank of India Governor Raghuram Rajan has said in a recent address.
As routine jobs get outsourced and automated, “moderate education no longer cuts it”, Rajan said in a keynote address at a conference at the Stigler Center at the University of Chicago Booth School of Business on political economy of finance.
The address explored three questions related to current populist discontent:
- WHY should trade be blamed?
- WHY is the issue being raised now?
- WHY are voters turning to far-right nationalist movements?
Automation of trade has been found to create despair and anger about the future among the working class in small cities and rural areas, he said, adding that what made matters worse was that it was expanding at an unprecedented pace.
The effects of automation and trade, he added, “have been very real,” quoting a study by Princeton University professors who concluded that there have been 5 lakh additional deaths among middle-aged white males due to drugs, alcohol and suicide between 1999 and 2013.
The despair of these well-educated individuals originate from jobs moving away to barely affordable big cities, resulting in unemployment, elaborated Rajan.
Exclusionary policies are the first step toward crony capitalism. If you can pick and choose who belongs amongst communities, you can also pick and choose who belongs within communities, and it leads to a breakdown of the market system.Raghuram Rajan, Former Governor, RBI
Rajan added that the 2008 global financial crisis was “the straw that broke the camel's back.” The bankers and the elite who were responsible for the upheaval safely backed out, while the rest of working class faced doom.
He blamed the slow pace social and economic adaptation to be the reason for the severe impacts of the technological revolution.
The reason why the sudden surge of populist nationalism manifested is because working class has been seeing people pushed by liberal elite taking away their jobs, their income, their dreams, said Rajan.
The “populist outcry”, he said, is from communities who have seen growth bypass them and their communities collapse. It “is a cry both of anger and for help. Pointing fingers at these communities and telling them they don’t understand is not the right answer”.
Populist nationalism, he argued, doesn’t have the answers for disempowered communities. “But I think if we don’t provide the answers, there is extreme danger that rather than opting for leaders who just talk the talk, (voters) will actually opt for leaders who walk the walk. And that can be much more damaging.”
Moreover, the emergence of social media has made people all the more aware and given radical movements a platform to rise.